Small
Business

What is the best home loan for bad credit?

Just because you have a low credit score (sometimes referred to as bad credit) doesn’t mean you’ll miss your opportunity to own a home one day. There are a few steps you can take to get a home loan.

What is bad credit?

In Australia, bad credit is often associated with a low credit score. Your credit score is a number lenders use to assess the risk of lending you money. You can find out what your credit score is for free by visiting Get Credit Score.

When it comes to applying for and taking out a home loan, your credit score will help a lender determine the amount of the loan and the interest rate. It’s a numerical figure that represents how likely you are to pay off loans, credit cards and utilities. But it can also impact your ability to take out a home loan in the future.

Getting a home loan with bad credit

If you’re applying for a home loan with bad credit, there are a few options to consider:

· Saving a deposit: Saving a deposit that’s more than 20% of the property’s value will help convince your lender of the limited risk you pose as a borrower.

· Comparing your options: To ensure you get a mortgage that suits your situation, carefully compare home loans before making a decision.

· Specialist lenders: There are specialist lenders who will carefully consider your application and credit history, as opposed to allowing a computer program to give you the green light.

Associated risks of applying for a home loan with bad credit

There a few risks associated with taking out a home loan:

· Small loan amounts: You might not be able to borrow as much as you’d like. This means you’ll need to reconsider your budget, or save a bigger deposit.

· High interest rates: Your lender might approve your loan with a high interest rate. This will impact your repayments and the amount of interest you pay over the life of the loan. Plan your budget carefully to ensure you are able to afford your repayments.

· Lenders mortgage insurance (LMI): LMI is a fee lenders charge to protect themselves against the risk of loans not being repaid. With bad credit, the risk of loaning you money is high, and therefore a fee for LMI is usually included.

· Damaging your credit score: Your credit report will include all references to any loans or credit cards you have applied for in the past five years. Applying and being rejected for a loan will go on your credit report, which will be taken into account in determining your credit score.

To avoid these risks, consider improving your credit score before applying for a home loan. You can do this by:

Related Articles:

Credit Cards for Bad Credit: Rebuild your score June 27, 2019 One of the worst things about having a bad credit rating or credit history is worrying that you’ll never manage to dig yourself out of the hole. People can have poor credit ratings for many reasons. Sometimes they’re made redundant and they’re unable to service their debts properly, other people…

How do people with bad credit get good credit? July 19, 2019 A significant proportion of Aussies don’t want to know what their credit rating is because they know it’ll be indifferent at best, with some fearing the worst. When you make an application for any type of credit, whether it’s a small overdraft or a home loan, lenders use your credit…

How to get a business loan with bad credit February 20, 2018 Businesses often require a financial investment to help get them up and running. But before a bank can grant you a loan it will review your credit. A good credit score is ideal, but not always the case. Here’s what you need to know if you’re worried about how bad…

Credit cards bad for health June 18, 2002 Over the past year, household debt in Australia has doubled and credit card debt has tripled, with Australians' total debts now topping $400 billion. Of this, $20.3 billion is outstanding credit card debt, with the average Australian now owing $5,000 on each card. There are almost 10 million cards on…

Credit cards bad for health June 18, 2002 Over the past year, household debt in Australia has doubled and credit card debt has tripled, with Australians' total debts now topping $400 billion. Of this, $20.3 billion is outstanding credit card debt, with the average Australian now owing $5,000 on each card. There are almost 10 million cards on…

CBA says bad credit problems fixed March 7, 2006 Commonwealth Bank says it has corrected a flaw in its internal credit scoring system that led to a big rise in the number of personal loan defaults in 2005. CommBanks’s retail bad debts rose 32 per cent in the first half of 2005. Commbank introduced on-the-spot approvals for personal loans…

Fix your bad credit file now November 17, 2009 A bad credit file can cost a lot in the long term. If you haven’t paid bills, or if you've had your power cut off, your car repossessed or skipped payments, exceeded card limits or defaulted, you could be refused a loan or be charged a higher interest rate.Consumers can…

Credit reports list bad behaviour February 26, 2010 Currently, credit reports list only negative information like serious defaults and bankruptcies. Under the new comprehensive reporting to be introduced next year credit agencies will be able to collect extra information, including repayment histories.Defaults stay on your record for up to five years and bankruptcies for up to seven. Now,…

Change your bad credit card now May 17, 2010 Millions of Australians never change their banks in their whole lifetime. Sixty per cent of Commonwealth Bank’s gigantic rusted on customer base have been with the bank for more than 10 years and are the least likely to ever change banks. One in every five of the customers of the…

Credit unions give bad advice to customers December 20, 2011 The Mutual Banking Code Compliance Committee issued its annual report yesterday, which reported widespread failure in several key compliance areas. Seven out of 10 mutuals surveyed provided incorrect or inadequate advice at the call centre level to callers requesting information on how to stop a direct debit linked to a…

For information on how we've selected these
"Sponsored" and
"Featured" products click here.
The comparison
rate is
based on a secured loan of $150,000 and a term of 25 years. WARNING: These comparison rates apply only
to
the example or examples given. Different amounts and terms will result in different comparison rates.
Costs
such as redraw fees or early repayment fees, and costs savings such as fee waivers, are not included in
the
comparison rate but may influence the cost of the loan.Compare More
Home LoansCompare More

Important information about this website

Who we are

InfoChoice is one of Australia’s leading financial services comparison website. We've been helping
Aussies find great offers on everything from credit cards and home loans to savings and personal
loans and more for over 25 years.

InfoChoice lists more than 3,000 financial products from 145 Australian banks, credit unions,
building societies and non-bank lenders.

We are not owned by a bank or an insurance company. InfoChoice, its directors, officers and/or
Representatives do not have any ownership of any financial or credit products or platform providers
that would influence us when we provide general advice. We may receive fees and commissions from
product providers for services we provide as detailed below.

Important Information

Although we cover a range of products, providers and services we don't cover every product, provider
or service available in the market. Products compared may not compare all features and options that
may be relevant you. Not all products offered by each supplier may be compared. The information and
products contained on this website do not constitute recommendations or suggestions to purchase or
apply for any particular product. Any advice provided on this website is of a general nature and
does not take into account your objectives, financial situation or needs. Products included on this
site may not suit your personal objectives, financial situation or needs. InfoChoice is not a
product issuer or a credit provider and does not provide personal financial advice or credit
assistance.

If InfoChoice refers you to a provider, you will be dealing with that provider directly and not with
us. InfoChoice accepts no liability in respect to any financial or credit product which you elect to
acquire from any provider.

By providing you with the ability to apply for an insurance quote or a credit facility we are not
guaranteeing that your application will be approved. Your application is subject to the Provider’s
terms, conditions and criteria.

Please consider whether it is appropriate for your circumstances, before making a decision to
purchase or apply for any product. If you are considering acquiring any financial product you should
obtain and read the relevant Product Disclosure Statement or other offer document prior to making an
investment decision.

We endeavour to provide you with up to date and accurate information, however, on some occasions
InfoChoice website may have some product changes that have not been reflected due to the large
volume of products we compare and our reliance on product providers. InfoChoice will not accept
liability for incorrect information. You should confirm any information with the product provider
and read the information they provide.

Please take an opportunity to read InfoChoice’s Privacy Policy, Terms of Use Policy and Financial
Service Guide and Credit Guide (FSCG).

Always free for you

Our service is free - no hidden fees or mark ups.

How we make money

“Sponsored” products are products offered by a provider with which InfoChoice has a commercial
marketing arrangement in place.

“Sponsored” products are displayed first within the search results pages and can be re-sorted without
this filter by de-selecting the “Show sponsored listings first”. They will have a link to a product
provider’s website should you wish to get more information or apply for the product. InfoChoice has
a commercial relationship with these product providers and may receive a commission, referral, fee
or payment from a provider when you click on a link to a product.

Fees for clicks referred to product providers on the following basis:

Cost per Click (CPA) for click referred from the InfoChoice website to a product provider

Cost per Application (CPA) for completed applications that resulted from clicks referred from
the InfoChoice website to a product provider.

Cost per Approved Application (CPAA) for completed approved applications that resulted from
clicks referred from the InfoChoice website to a product provider.

Cost per Lead (CPL) for enquiries referred to a product provider or where enquiries result from
referred clicks from the InfoChoice website to a product provider.

Commission share on referrals to third party advice providers.

Advertisement

“Featured” Products and “Advertisement” are a form of advertising. InfoChoice may receive a
commission, referral, fee, payment or advertising fees from a provider when you click on a link to a
product. We may sort or promote the order of these products based on our commercial arrangements.

Advertising fees from product providers for product advertisements through emails, sponsored content
or placement on the InfoChoice website are based on Cost per Impression, Cost per Click, Cost per
Application, Cost per Approved Application, Cost per Lead, Fixed Sponsorship/Advertising fee or a
combination.

InfoChoice may also receive fees from product providers for the following activities:

Subscription fees for data provision

Fixed cost development, licensing and hosting fees for the use of financial calculators, Key
Facts Sheets and research.

All fees are negotiated with institutions on a case by case basis and varies between products and
providers.